The USD/BRL closed yesterday’s trading near the 4.9235 level. Since the Christmas holiday the USD/BRL has increased in value from a low of nearly 4.8660 to its current price level. Light trading may be a culprit regarding the rise in prices of the USD/BRL. While the currency pair has certainly mirrored the broad Forex market and certainly went to a mid-term depth which tested early August values on the 26th of December, the recent incremental shift higher likely has speculators nervous.
When the USD/BRL opens for trading today it will be within the middle of its price range displayed in December. A range of 4.8500 to about 4.9600 has been rather consistent in the USD/BRL since the start of December. Yes, there have been outliers and traders need to remain on alert today and the remainder of the week because of holiday trading conditions which are producing extremely thin results in the USD/BRL. Light volumes will continue most likely until the 8th of January.
Incremental Move Higher and Nervousness in the USD/BRL
Traders who remain with bearish outlooks for the USD/BRL based on their outlooks regarding the U.S Federal Reserve’s change of rhetoric in the middle of December may be growing increasingly nervous about the currency pair’s recent move higher. Until full market volumes happen upon the return of financial institutions early next week it will be hard to gauge the seriousness of the increase.
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The ability of the USD/BRL to rise above the 4.9000 mark and sustain value is noteworthy technically, but until large players return to the Forex markets next week sentiment will be difficult grasp. Speculators who are intent on searching for downside momentum in the coming days may be on the correct path, but if there are not enough financial institutions to cause a reversal lower in the USD/BRL momentum downwards may prove tough to generate in the short-term.
USD/BRL and Quick Hitting Wagers a Choice
- Speculators who believe the USD/BRL has been overbought in the short-term may be correct, but they should be conservative with their wagers as light holiday trading dominates the Forex market today and the remainder of the week.
- Quick hitting bets that have a bearish perspective should not be overly ambitious. Yesterday’s trading in the USD/BRL after returning from the New Year’s holiday produced rather steady upwards buying which is suspicious.
- Resistance above could prove to be durable around the 4.9400 to 4.9500 values, and patience may be needed in the near-term in order to seek reversals lower if this resistance is going to be used to ignite selling positions.
Brazilian Real Short-Term Outlook:
Current Resistance: 4.9310
Current Support: 4.9140
High Target: 4.9470
Low Target: 4.8960
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